Today on the MikoBits show, I’m interviewing Brian Spector, founder of Qredo, a brilliant product designer, cryptographer and cybersecurity expert since working with RSA in 1995 and on through a brilliant career in cybersecurity and cryptography since then.
Satoshi Nakamoto opened his famous Bitcoin White Paper like this:
“A purely peer-to-peer version of electronic cash would allow online
payments to be sent directly from one party to another without going through a
financial institution. Digital signatures provide part of the solution, but the main
benefits are lost if a trusted third party is still required to prevent double-spending.”
The idea being that if we rely on a trusted third party to transact a purely peer-to-peer electronic cash, we lost the main benefits of Bitcoin (and by the way, all other decentralized cryptocurrencies).
This elegant solution created by Satoshi takes care of the need for trusted intermediaries in the case of “Bitcoin in motion” which is to say whenever we need to sign and send a transaction of bitcoins across an untrusted network.
But what Satoshi left as an exercise for the reader was the elimination of a trusted third party for the case of “bitcoin at rest”–the ownership model of bitcoin.
Bitcoin at rest depends on public key cryptography for proof of ownership. The “law of the private key” simply says that whoever owns the private key or even a copy of the private key has 100% full access rights to the wallet funds and can send them anywhere and to anyone they want, with impunity. This principle has led to two disastrous consequences–massive hacking of exchanges like MtGox, Coincheck, ShapeShift, Binance and many others, and also has led to bitcoin losses due to lost keys that are estimated to reach billions of dollars, because the corollary of this law is that if NOBODY has the private key, then NOBODY will be able to ever use or transfer the asset in question, and the asset will remain cryptographically locked.
So while Satoshi eliminated the need for a trusted third party when it comes to “bitcoin in motion”, because of the issue of private cryptographic key management, most users of bitcoin and other cryptocurrencies are stuck either managing their private keys themselves, or they have to hand over their keys to someone else such as a centralized exchange like Binance or Coinbase. Many millions of people have chosen to give their keys over to a third party that they have decided to trust for lack of a better option.
Qredo has created a Multiparty Computation (MPC) network that handles the key and key ownership issues in a decentralized way. This means that you are able to eliminate the need for a trusted third party for the use case of bitcoin ownership (and all other cryptocurrencies and even all other cryptographic secrets in general). So the elimination of the need for trusted third parties has been extended by Qredo to bitcoin and cryptocurrency ownership–not only for individual owners but for institutions.
Because of this Qredo becomes an essential technology for institutional custody of decentralized financial assets like bitcoin, ethereum and all other such blockchain based assets.
Satoshi solved the need for reliance on a trusted third party financial institution for the case of bitcoins in motion, Qredo solves the same need for the case of bitcoins at rest (aka “custody”).
By extending the core technology of bitcoin using cryptographic primitives and sophisticated mathematics, Qredo has enabled an exciting advancement in the security and usability of bitcoin and all other cryptographic assets.
Find out more about Qredo today: